Removing Barriers Blog

Letter sent prior to hearing with financial regulators in Senate Banking
Posted November 10, 2020 by CUNA Advocacy

CUNA wrote to Chairman Crapo and Ranking Member Brown prior to the Senate Banking Committee's hearing with financial regulators.  In the letter, CUNA wrote that credit unions remain in a position to help consumers, but looming stress suggests Congress and regulators need to act quickly to avoid a deeper economic crisis. 

CUNA’s letter notes two surveys that indicate significant economic assistance to consumers and small businesses is critically important.

“As Congress contemplates further COVID-recovery legislation and exercises its oversight responsibilities over the Federal financial regulators, it is critical that policy be examined and modified to ensure credit unions remain in a position to serve their members throughout and after this crisis,” the letter reads.

CUNA notes that credit unions are ready to help, as:

  • Collectively the nation’s 5,300 credit unions have ample liquidity, reflected in a 76.2% loan-to-savings ratio and surplus funds equal to 30% of assets (with 60% of those surplus funds in liquid assets);
  • Asset quality is high with the credit union delinquency ratio sitting at 0.52% in December according to CUNA survey results, the lowest level in 30 years; and
  • The system’s capital ratio has stabilized at 10.5%, well above Prompt Corrective Action’s (PCA) “well capitalized” level of 7%.

NCUA can take further steps to ensure credit unions remain in a position to serve their members, including:

  • Refrain from any share insurance fund premium assessments;
  • Temporarily exclude certain low-risk assets from net worth ratio;
  • Permit capitalization of interest on consumer mortgage loans;
  • Remove obstacles to consumers accessing the Payday Alternative Loans I program.

Congress could also take actions to help members, including:

  • Extend expiring CARES Act provisions related to Troubled Debt Restructuring and NCUA’s Central Liquidity Facility;
  • Provide temporary flexibility to NCUA to offer forbearance from PCA requirements;
  • Simplify the PPP loan forgiveness process. CUNA supports House and Senate bills to allow simple forgiveness for PPP loans under $150,000; and
  • Exempt member business loans during, and for one year after, the national emergency. CUNA supports House and Senate bills that would accomplish this.